Sebi rolls out new norms for specialized investment fund

The markets regulator tightens the framework, mandating ₹10 lakh minimum investment

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Markets watchdog Securities and Exchange Board of India (Sebi) on Thursday issued a regulatory framework for specialized investment funds (SIFs), requiring a minimum investment of ₹10 lakh across all strategies.

The new framework will be applicable from 1 April, Sebi said in its circular.

The SIF has been introduced to bridge the gap between mutual funds and portfolio management services (PMS) in terms of portfolio flexibility. Under the framework, investors are required to invest at least ₹10 lakh across all SIF strategies. This rule does not apply to accredited investors.

Investors have the option to use systematic investment plans (SIP), systematic withdrawal plans (SWP), and systematic transfer plans (STP) to manage their investments. However, the total value of their investments must remain above ₹10 lakh. If the investment value drops below this threshold due to market fluctuations, the investor will only be allowed to redeem the full remaining amount, but no partial redemptions will be permitted.

Investors cannot invest more than 20% (AAA-rated), 16% (AA-rated) or 12% (A-rated and below) in one company's debt securities. Further, they cannot invest more than 25% of net asset value (NAV) in any single sector.